SR-021908-8B~®
~;tYO, City Council Report
Santa Monica
City Council Meeting: February, 2008
Agenda Item: ~'~
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Five Year Financial Forecast, Public Comment on Budget Priorities
Including Comments on Community Development Block Grant and Home
Investment Partnership Act (HOME) Programs and Discussion of
Community Priorities for FY2008-09 Budget Development.
Recommended Action
Staff recommends that City Council:
1) receive the FY2008-09 through FY2012-2013 Five Year Financial Forecast as
background for development of the FY2008-09 budget;
2) receive public comments on FY2008-09 budget priorities, including Community
Development Block Grant (CDBG) and Home Investment Partnership Act
(HOME) program funds; and
3) based on this information provide staff with direction on Community Priorities to
guide the development of the FY2008-09 budget and FY2009-10 budget plan.
Executive Summary
This report provides an update on the current status of the economy and its potential
impact on budget revenues; presents a forecast of revenues and expenditures for the
major City funds; and provides an update on work efforts to the key Community
Priorities for the current year. The report requests that Council receive public
comments on community budget priorities and provide direction to staff regarding
Council recommendations on budget development for FY2008-09.
The economy has been giving mixed signals for the past few months which have not
been encouraging and even characterized as "unstable" worldwide. The economic
uncertainty creates difficulties in revenue planning for the future. For this year's Five
Year Financial Forecast, staff has projected three revenue scenarios. The Baseline
Scenario assumptions are detailed later in the report and are the best estimates of
expected revenues. It would be considered the "most likely" scenario. The "Worst"
Case Scenario projects a recession and its impacts on Property, Sales, Business
License, Transient Occupancy and Parking Facility taxes along with a loss of Utility
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User Tax revenue due to telecommunication changes. The "Best" Case Scenario
assumes very little economic downturn impact and increases Sales, Property and
Business License taxes above Baseline along with the impacts of a new fee study in
FY2011-12. On the expenditure side, the Baseline and "Worst" Case include annual
labor increases of 4% while the "Best" Case reduces the labor increase in years
FY2009-10 through FY2012-13 at 3% consistent with the average estimated Consumer
Price Index for Santa Monica.
The Five Year Financial Forecast for the General Fund continues to reveal revenues
growing at a slower rate than expenditures. Under the assumptions in the Baseline
Scenario, the City can balance its budget in FY2008-09, but for the next four years the
budget deficit grows from $3.6 million to $16.4 million. It is important to note that the
Baseline Scenario does not factor in labor costs above cost-of-living increases,
additional positions, or revenue reductions from a loss of Utility Users Tax. As was
stated last year, additional growth in programs, enhanced labor benefits, more funding
for deferred maintenance and replacement of basic infrastructure will require additional
resources. Other funds are also briefly presented and also show structural imbalances
in their forecasts. As always with limited resources, priorities for funding will need to be
made during the budget process.
To begin the prioritization, community priorities have been sought over the past four
months from community meetings, a-mails to budget(a2smgov.net and comments from
City boards and commissions. The majority of comments received to date, identified
issues of concern as
• Mobility
• Public Safety and Violence Prevention
• Livable neighborhoods
Discussion
Economic Update
National and State Economies
Economists are predicting the national economy to continue its slowdown over the next
six to twelve months with a 42% chance of recession. Impacting the economy at all
economic levels is the fallout of the sub-prime mortgage problem. The housing market
is in one of its deepest slumps ever. Existing home sales in December were down 13%
from a year earlier with the median price dropping 6%, the largest year-to-year drop on
record. December housing starts were down 38% from a year earlier. In addition, the
national unemployment rate unexpectedly rose to 5.0% in December and is projected to
increase slightly in 2008 and 2009 and the Index of Leading Economic Indicators
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declined in November for the seventh time in the last eleven months. The decline for
the last six months is 1.2%, the first reading greater than 1 % since the 2001 recession.
A decrease of 1 % is often an indicator that a recession is two quarters away.
Inflation has been increasing recently due to higher energy prices although "core
inflation", excluding food and energy, has moderated to a rate acceptable to the Federal
Reserve Board (FED). The December 2007 UCLA Anderson Forecast projected that
the annualized growth rate of Real Gross Domestic Product (GDP) for the fourth quarter
2007 and first quarter 2008 will be below 1% before recovering slightly to a 1.9%
average rate for all of 2008. This forecast was released prior to the release of
December economic statistics and recent forecasts by a number of economists are
more pessimistic. Consumer spending, which accounts for almost 70% of total GDP, is
showing signs of weakness, although still growing. Over the past six months actions by
the FED to stimulate the economy have lowered the yield on 2-year Treasury notes by
2%. However, the economy continues to suffer and further FED action is expected.
The economic outlook for California is essentially the same as for the nation.
Unemployment is increasing and the slumping housing market could lead to further
weakness in the economy, particularly if it gets to the point where consumer spending is
affected. Growth in State personal income and retail sales over the next 12-24 months
is expected to be less than in recent years, seriously impacting the State of California
budget revenues. Gov. Arnold Schwarzenegger has declared a fiscal emergency and
released his blueprint for closing an estimated $14 billion budget deficit, a gap so large
that the State will either have to raise taxes or cut programs in order to resolve it. The
potential exists for the State to borrow property taxes from cities, counties and special
districts, which could further exacerbate the budget challenge for many local
governments that are already seeing decreases in tax revenues. Under the provisions
of Proposition 1A, the State may borrow up to 8% of total local property taxes under
certain conditions. However, the impact to each local agency may be greater or less
than 8% depending on how the State structures the borrowing
3
Santa Monica Economy
Within this context, the City's economy is expected to be weaker over the forecast
period than in the last few years. Historically, Santa Monica has tended to not be as
negatively affected as some areas in tough economic times due to a relatively strong,
diversified economy. However, the national and state economies are having an impact
on Santa Monica.
Construction activity as measured by building permit revenue is down due to fewer
permits being issued and smaller total valuation of permits issued. Sales tax revenue
have been flattening in recent quarters reflecting a decline in new vehicle sales and
leases, which make up almost 22% of Santa Monica's sales tax receipts. New auto
sales for the quarter ended September 30, 2007 were down 12.7% from the same
quarter a year ago, following national auto sales trends. Retail sales activities will also
be negatively impacted during the remodel of Santa Monica Place, with an expected
impact on sales tax revenue of $1.0 million during the construction period. The number
of property transfers has decreased significantly, which will likely result in decreased
property tax revenues over the next few years. The ongoing Writers' Guild strike may
also have a negative impact on Santa Monica's economy and an extended slump in the
housing market could lower property values. Economic activity from tourism remains
strong due to the declining value of the dollar and the commercial real estate market
also remains healthy, but both could be negatively affected if the national and
international economies enter a prolonged and significant downturn.
Five Year Forecast of Maior Funds
Each year staff projects the status of the City's major funds for the five year period into
the future, with a primary focus on the General Fund. The projections update the status
of the available fund balances at the end of last fiscal year (6/30/2007), review current
revenue received to date (FY2007-08), update economic forecast information, project
revenue growth, identify expenditure growth assumptions and project expenditure
growth. These forecasts set the stage for the development of the budgets for next year.
4
The assumptions used in preparing the FY2007-08 through 2012-13 Five Year Forecast
reflect a review of information concerning the national, state, regional, and local
economies. A number of respected sources of data were used including the UCLA
Graduate School of Management, the Los Angeles Economic Development Corporation
(LAEDC), chief economists of several different financial institutions, and various
consulting firms.
General Fund
This year three scenarios are prepared based on staff's assessment of Baseline (most
likely revenue case with conservative expenditure case), Best Case (minimal recession
and UUT impact with a modified expenditure case of tamed inflation) and Worst Case
(all recession and UUT impact with conservative expenditure case).
For details in the development of the three scenarios, please see the Attachment A.
BUDGET GAPS
With the revenue projections plus available balance sheet resources and the
expenditure projections, the City financial forecast shows a structural deficit in both the
baseline and worst case scenarios. A structural deficit is defined as a budget where
ongoing revenues are not sufficient to cover ongoing expenditures at current service
levels.
The baseline scenario shows a General Fund deficit beginning in FY2009-10 of $3.7
million and growing to $16.4 million in the fifth year of the Forecast.
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• Slower revenue
growth
• Santa Monica
Place renovation
• Two new hotels
• Mainfenance of
UUT on
telecomm
• 4% CPI on labor
costs
• CPI on Supplies
& Expenses
• No additional
positions
The worst case scenario shows a General Fund structural deficit of $8.0 million
beginning next fiscal year (FY2008-09) due to the reduced revenue projections
identified above. This deficit grows to $32.6 million in the fifth year.
• Recession
impact on most
revenues
• Loss of UUT on
telecomm
• 4% CPI on labor
costs
• CPI on Supplies
and Expenses
The "Best" Case Scenario, which projects a rosier revenue outlook and lower labor
projections, is essentially balanced throughout the full five year period. This is by far the
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least likely of all scenarios since it assumes that the economic downturn will not impact
Santa Monica to any significant degree and that all labor costs increases will be held to
3% for years two through five.
Other Funds
• No recession
impact
• Maintaining UUT
on telecomm
• Higher Santa
Monica Place
revenues
• 3% CPl on labor
costs after 07/08
• CPI on Supplies
and Expenses
Other major funds that are reviewed during the Five Year Forecast fall into three
categories:
• Enterprise funds that are operated to generate sufficient revenues to sustain
necessary operation and capital needs
o Airport /Special Aviation
o Big Blue Bus
o Solid Waste
o Wastewater
o Water
• Enterprise funds that require General Fund subsidies in order to meet their
operating and capital needs
o Cemetery
o Civic Auditorium
o Pier
• Special Revenue Funds where fund are restricted for specific purposes
o Beach
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o Housing Authority
For these funds, only one expenditure scenario is developed which is the baseline
forecast where labor costs are increased from the FY2008-09 Budget Plan year at 4%
per year beginning in FY2009-10. In general, fee and utility rate revenues are assumed
to increase at CPI. Where funds show a structural deficit, higher fee and rate increases
are proposed as alternatives. In summary, the funds status is:
NON-SUBSIDIZED ENTERPRISE FUNDS
Airport -During the five year forecast period, the fund maintains a positive fund
balance; however, only minimal capital expenditures are assumed and no re-
payments to the General Fund are assumed on loans totaling $9.5 million until
2015 when rental rates on lease contracts are due for renewal and can be
adjusted to market rate. Recent loans to the Airport fund include $2.4 million for
capital expenditures in FY2004-05 and $250,000 this year for litigation costs
related to airport operating issues with the Federal Aviation Administration.
Big Blue Bus -The forecasting of the status of the Big Blue Bus Fund is
different from other funds in that funds available to the Big Blue Bus (BBB) are
not always held by the City but are available from the Los Angeles Metropolitan
County Transportation Authority (MTA) in the form of grant subsidy funds per the
formula share allocated by the MTA to BBB. Annual allocations of funds not
spent in the year of allocation are available up to two years later for use by the
transit system. The majority of the subsidy funds, including State transit
Assistance Fund (STA), .Transportation Development Act funds (TDA),
Proposition A and Proposition C are sales tax based and grow by the sales tax
growth rate of the County of Los Angeles. For the purposes of this forecast
these funds are increased based on the sales tax growth assumptions based on
UCLA Anderson Forecast modified by MTA forecasts and Big Blue Bus staff
assessments. The baseline forecast includes additional STA revenues from
Proposition 42 beginning in FY2008-09 of $1.2 million. Given the State's budget
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crisis, it is not clear whether the State will borrow transportation funds again to
close the budget gap. At this moment, the Big Blue Bus staff is cautiously
optimistic and believes that STA funds will be left intact
A structural operating deficit still exists for the BBB and unless a fare increase is
adopted, the Big Blue Bus will be required to use available prior year subsidy
funds in FY2008-09 ($1.0) and FY2009-10 ($2.6). In future years the forecast
shows insufficient revenues to cover expenditures. BBB anticipates proposing to
Council a fare increase for FY2008-09. A study is currently being conducted to
assess operational efficiencies and financial capacity of the organization.
Solid Waste Fund -The baseline forecast for the Solid Waste Fund assumes
rate increases by CPI and services provided by City staff remaining at the
FY2007-08 levels. At this rate, the Fund's expenditures will exceed its revenues,
depleting its Rate Stabilization Reserve ($0.5 m) in FY2008-09. The structural
deficit continues each year with dwindling reserves in FY2009-10 ($1.8 m.) and
FY2010-11 ($0.6 m) until FY2011-12 when all reserves are depleted and the
fund is in a deficit of $0.8 m growing to $2.7 m in FY2012-13.
In November, Council authorized the City to take control of all commercial
collections, beginning January 2009. Staff has also been reviewing options for a
public-private partnership regarding transfer station operations. These changes
are not included currently n the baseline forecast, but will impact the forecasted
fund balance and future rate changes. An updated fund balance forecast will be
presented to Council in the next few months as a new public-private partnership
for the transfer station is implemented.
Water Fund - Under a baseline scenario where rates increase at CPI, the fund
in FY2009-10 will use almost $900,000 of the $1.0 million Rate Stabilization
Reserve to fund operations. By FY2010-11, all reserves are depleted (operating,
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rate stabilization and capital) with a total fund deficit of $0.8 million growing to
$9.6 million with no reserve funds. Based on this analysis, rate increases above
CPI are required.
The baseline forecast does not consider any impacts of a new Water Master
Plan, which is expected to be developed over the next several months. The
Water Fund is undergoing a rate study to evaluate the fund's ability to sustain
services. It is anticipated that rate recommendations, along with more detailed
financial information, will be presented to City Council in February with
implementation of changes prior to the end of the fiscal year.
Wastewater Fund -The baseline scenario reflects a fund deficit in the current
fiscal year of 6.0 million growing to $46.4 million in FY2012-13. However, the
fund has fronted $6.5 million in earthquake related construction funds that are
anticipated to be reimbursed by FEMA by FY2009-10. If these funds were
loaned by another fund, the Wastewater Fund will end the fiscal year on a more
positive note. Staff is studying other factors that could improve the fund position,
but these are not included in the baseline scenario. These options, along with
proposed rate increases will be presented to City Council in February for
consideration.
SUBSIDIZED ENTERPRISE FUNDS
Cemetery Fund -Under the baseline scenario, subsidies from the General Fund
to the Cemetery Fund are necessary throughout the five year forecast period.
FY2008-09 requires $0.3 million growing to $0.6 million in FY2012-13.
Over the past two years, staff has pursued several measures to improve the
maintenance and operations of the Cemetery and a Business Plan is currently in
the final stages of completion. It is anticipated that the Plan will call for
expansion capacity on the Cemetery property requiring additional capital
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investments which will over time return higher revenues to the Fund. Financing
options will be included in the Business Plan.
Civic Auditorium -The Civic Auditorium requires an ongoing annual General
Fund subsidy of $0.7 million in FY2008-09 and from $1.5 to 1.6 million in
FY2009-10 through FY2012-13. This baseline forecast does not include major
infrastructure improvements, which would increase the subsidy.
Pier Fund -The Pier Fund generates approximately $3.2 million in revenue and
has operating expenses of $4.2 million for FY2007-08. The structural deficit
requires a General Fund subsidy for the Fund to remain in balance. The
subsidies required annually are $1.1 million in FY2008-09 growing to $1.6 million
in FY2012-13. As with the Civic Auditorium Fund, the Pier Fund baseline
forecast does not include major infrastructure improvements. CIP needs have
been identified as $5.3 million in FY2008-09 for infrastructure improvements with
$3.0 million annually thereafter for ongoing maintenance and capital programs.
Housing Authority Fund -This year, the Five Year Financial Forecast indicates
the Housing Authority for the first time will require subsidy funds in order to
maintain the same level of service currently provided. Declining Federal
subsidies have reduced the funding below the level needed to administer the
City's housing programs. The subsidies required annually are $0.2 million in
FY2008-09 growing to $0.5 million in FY20012-13.
SPECIAL REVENUE FUNDS
Beach Fund - A baseline scenario for the Beach Fund where the Annenberg
Community Beach House operating expenditures are incorporated into the
budget in FY2009-10 shows a need for Beach Fund subsidies of $0.2 m in
FY2010-11 growing to $2.0 million in FY2012-13. This scenario does not include
any County Lifeguard costs above CPI. The City and the County have been on a
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month-to-month agreement since December 31, 2006. Also not included are
additional one-time costs for the refurbishment of the Lifeguard Headquarters
building. An estimated $1.6 million will be requested by Community & Cultural
Services Department as part of the FY2008-09 Capital Improvement Program
budget requests.
Each of these funds will be updated and further addressed during the development,
presentations and discussions on the FY2008-09 budget.
Community Priorities
Update on FY2007/O8 Community Priorities Work Plan
With the adoption of the FY2007-08 budget, Council identified three areas of special
work plan focus for this year's budget including: Homelessness, Land Use and
Circulation Element Update and Youth.. In addition, overall Community Priorities are:
Culture, Sustainability, Education, Customer Service, Capital Needs & Infrastructure
and Recreation & Active Living
Attachment A, identifies work plan accomplishments to date on Community Priorities for
FY2007-08. In addition to these, this year staff has identified two other areas of priority
and focus: maintaining financial stability and ensuring adequate resources to meet
workload and service demands.
Council had requested that staff provide information at the time of the mid-year budget
review on available youth employment services and investigate options for expanding
these opportunities. The results of this assessment are transmitted to Council in a
separate Information Item. The report provides a menu of options for employing youth
ages 14-24 for consideration. Given the cost implications of the options, staff would
need to evaluate them in the context of planning next year's budget, considering the
availability of resources and priority of other community needs.
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Community Outreach for FY2008-09 Budget Priorities
During the months of November, December, and January five neighborhood meetings
were cosponsored by the City Manager's Office and the five active neighborhood
associations. The meetings conducted throughout Santa Monica were focused on
receiving comments from the community regarding their priorities for City programs and
services.
Comments received at the meetings through discussion and on comment cards,
through a-mail to the budget a-mail address (budget@smgov.net) or City Manager's e-
mail box, and postal mail (Attachment C) can be categorized into the following major
areas:
Mobility
Mobility issues continue to be of major concern among residents. Residents
expressed frustration with traffic and described the difficulty of getting around and
through the City. While acknowledging that longer-term solutions are in progress,
residents expressed a need for more immediate actions. Improved enforcement
of traffic laws and additional left turn lanes were suggested as methods to
improve traffic in Santa Monica.
Community members agreed that a balanced approach to parking is needed; one
that gives residents and visitors equal consideration. Many agreed on the need
to encourage the use of alternative transportation to help alleviate traffic and
decrease parking demands.
Many suggested that the City improve crosswalks to increase pedestrian
visibility, increase the number of flashing smart crosswalks, increase the length
of time provided for pedestrian to clear crosswalk before signal changes, and
assess the use of diagonal crosswalks to avoid pedestrian and vehicle conflicts.
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Public Safety and Violence Prevention
Another message was the concern for public safety. Some requested improved
communication between the Police Department and residents, increased police
presence in neighborhoods, and continued efforts to combat youth violence.
Residents were receptive to the new policing strategy and the desire to create
improved partnerships between the community and the Police Department.
As the number of bicycle riders increases, community members expressed the
needs for more innovative ways to ensure bicyclist safety (i.e. bike only streets,
bike pathways along congested streets, improved bike lanes & signage) and
enforcement to ensure that bicycle riders are stopping at stop signs and obeying
all traffic laws.
Livable Neighborhoods
Street Lighting, Underground Utilities,
Forest
Neighborhood Aesthetics, Community
Some residents expressed concern that their neighborhoods are too dark at night
and need additional neighborhood lights. Community residents felt that improved
street lighting would deter crime and improve pedestrian and bicycle safety. A
few residents recommended that utility lines should be placed underground and
recommended formation of assessment districts to identify and fund those
projects or identify the most opportune time to move forward on these projects
based on other infrastructure improvements. Residents expressed their desire
that neighborhood improvements be aesthetically pleasing. Community
members expressed concern over the community forest and the proposed
removal of the ficus trees on 2nd and 4th Streets.
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More detailed summaries of each Community Meeting are included in Attachment C, as
well as letters from the City's Commissions and Boards. In addition, public comments
will be received tonight.
Financial Impacts & Budget Actions
There is no immediate budget impact as a result of receiving the information provided
tonight. Direction provided by City Council based on information in this staff report and
public input received during the Council meetings will assist in determining the direction
to be taken in deciding budget recommendations for FY2008-09.
Prepared by:
Janet Shelton, Budget Manager
Approved:
Carol Swindell °
Director of Finance
Forwarded to Council:
Manager
Attachments:
A -Five Year Forecast
B -Community Priority Update
C -Community Comments
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ATTACHMENT A
FIVE 1 ~~~
FINANCIAL FORECAST
FY2008-09 through FY2012-13
Economic Uadate
National and State Economies
Economists are predicting the national economy to continue its slowdown over the next
six to twelve months with a 42% chance of recession. Impacting the economy at all
economic levels is the fallout of the sub-prime mortgage problem. It has lowered
housing sales which are down 20% nationally and median housing prices which are
down 3.3%. In addition, the national unemployment rate unexpectedly rose to 5.0% in
December and is projected to increase slightly in 2008 and 2009 and the Index of
Leading Economic Indicators declined in November for the seventh time in the last
eleven months. The decline for the last six months is 1.2%, the first reading greater
than 1% since the 2001 recession. A decrease of 1% is often an indicator that a
recession is two quarters away.
Inflation has been increasing recently due to higher energy prices although "core
inflation", excluding food and energy, has moderated to a rate acceptable to the Federal
Reserve Board (FED). The December 2007 UCLA Anderson Forecast projects that the
annualized growth rate of Real Gross Domestic Product (GDP) for the fourth quarter
2007 and first quarter 2008 will be below 1 % before recovering slightly to a 1.9%
average rate for all of 2008. Consumer spending, which accounts for almost 70% of
total GDP, is showing signs of weakness, although still growing. Over the past six
months actions by the FED to stimulate the economy have lowered the yield on 2-year
Treasury notes of 2%.
The economic outlook for California is essentially the same as for the nation.
Unemployment is increasing and the slumping housing market could lead to further
weakness in the economy, particularly if it gets to the point where consumer spending is
affected. Growth in State personal income and retail sales over the next 12-24 months
are expected to be less than in recent years, seriously impacting the State of California
budget revenues. Gov. Arnold Schwarzenegger has declare a fiscal emergency and
released his blueprint for closing an estimated $14 billion budget deficit, a gap so large
that the State will either have to raise taxes or cut programs in order to resolve it. The
potential exists for the State to borrow property taxes from cities, counties and special
districts, which could further exacerbate the budget challenge for many local
governments that are already seeing decreases in tax revenues. Under the provisions
of Proposition 1A, the State may borrow up to 8% of total local property taxes under
certain conditions. However, the impact to each local agency may be greater or less
than 8% depending on how the State structures the borrowing
Santa Monica Economy
Within this context, the City's economy is expected to be weaker over the forecast
period than in the last few years. Historically, Santa Monica has tended to not be as
negatively affected as some areas in tough economic times due to a relatively strong,
diversified economy; however, sales tax revenues have been flattening out the last few
A-1
quarters, and the number of property transfers has decreased significantly, which will
likely result in decreased property tax revenues over the next few years. Economic
activity from tourism remains strong due to the declining value of the dollar and the
commercial real estate market also remains healthy.
The national and state economies are having an impact on Santa Monica. Construction
activity as measured by building permit revenue is down due to fewer permits being
issued and smaller total valuation of permits issued. The retail sales flattening reflects
the decline in out the last few new vehicle sales and leases, which make up almost 22%
of Santa Monica's sales tax receipts. New auto sales for the quarter ended September
30, 2007 were down 12.7% from the same quarter a year ago, following national auto
sales trends. Retail sales activities will be negatively impacted during the remodel of
Santa Monica Place, with an expected impact on sales tax revenue of $1.0 million
during the construction period. The ongoing Writers' Guild strike may also have a
negative impact on Santa Monica's economy and an extended slump in the housing
market could lower property values.
A-2
Five Year Forecast of Maior Funds
Each year staff projects the status of the City's major funds for the five year period into
the future, with a primary focus on the General Fund. The projections update the status
of the available fund balances at the end of last fiscal year (6/30/2007), review current
revenue received to date (FY2007-08), update economic forecast information, project
revenue growth, identify expenditure growth assumptions and project expenditure
growth. These forecasts set the stage for the development of the budgets for next year.
The assumptions used in preparing the FY2007-08 through 2012-13 Five Year Forecast
reflect a review of information concerning the national, state, regional, and local
economies. A number of respected sources of data were used including the UCLA
Graduate School of Management, the Los Angeles Economic Development Corporation
(LAEDC), chief economists of several different financial institutions, and various
consulting firms.
A-3
General Fund
REVENUE PROJECTIONS
The baseline forecast is based on the assumption that the declining national and state
economies will affect Santa Monica revenues over the first part of the forecast period.
Growth in the major economy-driven tax revenues such as sales taxes, business
license taxes, and property taxes are expected to be below historical trends for the first
two to three years of the forecast period. Tourism is projected to remain relatively
strong and the current high hotel occupancy rates are expected to continue, but the
recent high growth in average room rates over the last several years is assumed to
moderate. The baseline forecast also takes into accouht certain known impacts
including the eighteen month closure of Santa Monica Place and the opening of two
small hotels in the City. Potential loss of Utility Users Taxes from telecommunication
due to legal challenges is not included in the baseline.
The FY2007-08 estimated actual revenues are the starting point for revenue projections
for future years. These revenues have been updated to reflect current year-to-date
actual receipts. Overall revenue adjustments in FY2007-08 reflect additional revenues
of $0.35 million primarily due to higher Property, Business License, Transient
Occupancy, Real Property Transfer, and Parking Facilities taxes, plus increased Rental
Revenue, Interest Income, Parking Permits and State Mandates (SB90)
Reimbursement, along with higher Residential Building Report and Document Imaging
fees. These increases are offset by revenue decreases in Utility Users Taxes, Sales
Taxes, Vehicle License Fees and less Building Permit, Plan Check and Zoning
Approval/Variance fees. Details of the revenue changes are presented in the Review of
Mid-Year 2007-08 Budget Status staff report also presented on the Council agenda for
February 12, 2008.
Future years' revenue growth is based on a variety of factors, depending upon the
revenue source. The five major General Fund revenue sources are projected for the
Baseline Scenario as follows:
• Utility Users Tax -Grows by 3% per year for natural gas, cable television and
city utilities. Telephone is increased at 1% per year reflecting a decrease in
hardwire services offset by an increase in wireless services. Taxes from electric
utilities are driven by Southern California Edison rates and are projected to grow
by 3% in FY2008-09 increasing in FY2009-10 and FY2010-11 to reflect
anticipated rate increases, lowering again to 3% in the last two years of the
forecast. The results are the following growth in UUT revenues: FY2008-09 -
2.2%, FY2009-10 and FY2010-11 - 4.9%, FY2011-12 - 2.9%, FY2012-13 -
2.3%.
• Sales Tax -Revenues are expected to grow slowly in the first two years to reflect
slowing economic conditions and have moderate growth for the remainder of the
A-4
forecast period. Baseline growth for FY2008-09 is 3% from ongoing FY2007-08
revenues. FY2009-10 and FY2011-12 are projected at 4.5% growth and
FY2012-13 is projected at 5.5%. Additionally, the forecast is adjusted to account
for loss of revenue for eighteen months from the closure of Santa Monica Place
for renovation, and increased revenue from the renovated facility after it re-opens
• Property -Tax -Housing market softening is projected to affect Santa Monica in
the short term. The number of property sales has decreased significantly over
the last year and the trend in housing prices has been mixed. Most economists
believe that the housing market decline will not hit bottom until some time in 2008
and will remain weak into 2009. In addition, the slowing economy may spill over
into the commercial real estate market. Based on these conditions, it is
anticipated that the assessed value growth in Santa Monica will continue, but at a
slower rate of growth than experienced of the last several years.
The rates of City revenue increases, after accounting for the impact of the
Earthquake Recovery Redevelopment Project Area (RDA) where no assessed
value increases flow to the General Fund, are projected to increase by 4% in
FY2008-09, 2% in FY2009-10 and 4% thereafter. Revenue from unsecured
property taxes (such as airplanes) is projected to remain relatively flat throughout
the forecast period. Pass-through revenues from the Earthquake Recovery RDA
will approximate the rate of tax increment growth in the project area. State Public
Safety Augmentation Fund is projected to grow at the sales tax growth rate.
• Business License Tax -Revenues reflect a slower economic growth of the first
part of the forecast period. Growth rates are projected at 3.7% in FY2008-09,
1.7% in both FY2009-10 and FY2010-11 (excluding the impact of Santa Monica
Place closure) and 3.7% per year thereafter. The highest rates of growth are
expected to be in the Professional and Service categories.
• Transient Occupancy Tax -Hotel room rates continue to grow significantly and
occupancy rates are considered "full occupancy". Based on information provided
by PKF Consulting and the Santa Monica Convention and Visitors Bureau,
Transient Occupancy taxes are projected to grow by 4.9% in FY2008-09. For the
remainder of the forecast period, the rate of revenue growth is expected to be 4%
per year, entirely due to room rental rate increases. The forecast also assumes
the addition of two new 75 room hotels currently under development and the re-
opening of another hotel that was closed for approximately one year.
Based on the above, the General Fund revenues grow from $246.2 million in this fiscal
year to $285.8 million in the fifth year of the projection (FY2012-2013). After factoring in
the 10% Operating Contingency needs, the chart below shows growth in total resources
available for operations and capital in the General Fund by year.
A-5
The Five Year Financial Forecast also provides two alternative revenue scenarios for
Santa Monica. These scenarios include a "worst" case alternative that is more
pessimistic than the Baseline and a "best" case that is more optimistic than the
Baseline.
The "Worst" Case Scenario assumes that Santa Monica will be impacted by a recession
for 1-2 years and changes in the loss of most .Utility Users Taxes from
telecommunications. It should be noted that the "Worst" Case Scenario does not reflect
all potential revenue impacts that could occur. The scenario is a pessimistic, not
catastrophic, view of revenue risks. In this scenario, revenue reductions are reflected
in:
• Utility Users Tax -Legal challenges to the tax on telecommunications are
reflected in this scenario. The "Worst" Case, estimates a loss of $10 million
annually with ahalf-year loss in FY2008-09 of $4.8 million.
• Property Tax - Assumes a significant impact of the housing downturn on Santa
Monica. This scenario uses annual property tax growth rates equal the average
of the worst five year experienced by Santa Monica period since Prop 13 was
enacted. Revenue loss ranges from $0.2 million in FY2008-09 growing to $1.0
million in the fifth year
• Sales Tax -Assumes lower sales in a recession holding revenue flat in FY2008-
09 over FY2007-08, then 3% growth in FY2009-10 and baseline growth in future
years. The revenue loss ranges from $0.3 million in FY2008-09 which due to a
lower base grows to $0.6 million in the fifth year.
A-6
Business License Tax -Assumes that business growth will be significantly
impacted by a recession holding FY2008-09 through FY2010-11 revenue growth
to 1.7% annually with baseline growth in the last two years of the forecast. The
revenue losses range from $0.5 million in FY2008-09 growing to $0.6 million in
the fifth year.
• Parking Facility Tax -Assumes that poorer economic conditions will impact
parking activity in the City and lower the growth to 50% of the baseline growth in
the first two years of the forecast and CPI thereafter. The revenue losses range
from $0.2 million in FY2008-09 growing to $1.1 million in the fifth year.
Transient Occupancy Tax -Assumes that a recession and high room rates will
impact revenues. Under this scenario, the annual growth rate is held to CPI or
3% per year. The revenue losses range from $0.6 million in FY2008-09 to $2.4
million in the fifth year.
• Interest Revenue -Assumes that the current low interest rate environment will
extend for one or two more years. The impact on revenue would be a loss of
$1.3 million in FY2008-09 and FY2009-10, $1.4 million in FY2010-2011 and $0.5
million in each of the last two years of the forecast.
Theses assumption changes decrease General Fund revenues from $7.9 m in FY2008-
09 to $16.2 m in FY2012-13 over the Baseline Scenario
General Fund Revenues
"Worst" Case Scenario
Millions
$350 ~ All Other
~ Fees /Charges
$300
_
' r All Other Taxes
$250 ^"~ "'" ~ Transient Occup
$200 a Business License
$150 ^ Property Tax
~ Sales & Use Tax
$100 ®_`=° ... - --
- _ _ _" _
®Utlity Users Tax
$50
$0
FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13
Fiscal Year
The "Best" Case Scenario assumes that Santa Monica will not be hit hard by the current
economic instability and primarily reduces the impact of the current economic climate on
Santa Monica revenues. This scenario makes modifications to four major revenues:
A-7
• Sales Tax -Assumes increased sales tax revenues to the historical average
growth rate of 5.7%, rather than the UCLA forecast of 3.0% to 4.5%. In addition,
the "Best Case Scenario increases Santa Monica Place revenues following
renovation to 100% increase rather than the 50% increase assumed in the
Baseline Scenario. With these two modifications, FY2008-09 and FY2009-10
revenues increase $0.9 million and $1.6 million respectively. With the higher
Santa Monica Place revenue option, increases in FY2010-11 are $2.6 million
rising to $3.5 million in the fifth year.
• Property Taxes -Assumes Santa Monica will not be hit hard by the downturn in
housing sales and prices. Growth in revenues is set at a rate equal to the
average of the last five years, or 5.3% annually. This assumption increases
FY2008-09 and FY2009-10 revenues by $0.5 million and $1.3 million
respectively, which grows to $3.0 million in the fifth year.
• Business License Tax -Assumes that the recession will not affect Santa Monica
businesses significantly. It reverses the slowdown assumed in the Baseline
Scenario. This assumption increases FY2008-09 and FY2009-2010 revenues by
$0.3 million and $0.8 million respectively, growing to $1.4 million in the fifth year.
• .Fees and Charges -Assumes that a new fee study will be implemented in
FY2011-12 adding $1.30 million in that year growing to $1.34 million in FY2012-
13.
These modifications increase General Fund revenues from $1.7 m. in FY2008-09 to
$9.2 million in FY2012-13.
General Fund Revenues
"Best" Case Scenario
Millions
$350 x All Other
___ ~ Fees /Charges
$300 --'
___ QAIIOtherTaxes
$250 ~ Transient Occup
$200 iii ~ `s''. Business License
:. Property Tax
$150 a
~
i ~ Sales & Use Tax
$100 I ®Utlity Users Tax
$50
$0
FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13
Fiscal Year
A-8
EXPENDITURE PROJECTIONS
Primary Cost Escalator- Labor
Government is primarily a service industry. Labor costs including associated fringe
benefits comprise 60% of the FY2007-08 operating budget city-wide. For the General
Fund, this percentage is 67%. Increases in these costs above the growth in revenues
has led to an imbalance in ongoing revenues versus ongoing expenditures. Therefore,
it is essential to maintain controls on the growth of the cost of labor while ensuring that
labor rates and fringe benefits offered by the City of Santa Monica are competitive so
that we can continue to draw quality job applicants and ensure retention of existing
employees.
General Fund
Operating Expenses
A-9
96% of total General Fund labor costs are controlled by three major components. 70%
of the labor budget is salaries and wages. To control these costs, agreements with City
labor groups escalate salaries and wages annually based on the Consumer Price Index
(CPI) but limit annual increases to a maximum of 4%.
Employer paid medical costs comprise 11 % of the labor costs and are capped at a fixed
average contribution per employee. Currently, under existing labor agreements,
increases in City costs are capped at 12% per year.
Fifteen percent of the labor costs are for contributions to the California Public Employee
Retirement System (CaIPERS). In the past, stock market volatility and benefit
enhancements created uneven spikes in the contribution requirements. In the past few
year, CaIPERS extended the payment period for under-funded plans and the
recognition of credits for over-funded plans in order to minimize year-to-year
contribution fluctuations.
Expenditure Scenarios
This year Baseline and "Best Case" scenarios have been developed for expenditures
with the only change in assumptions being the labor costs increase. The Baseline
scenario includes a 4% labor cost-of-living adjustment (COLA) across all forecast years.
The "best case" scenario has a 4% COLA for FY2008-09 and 3% for the out years.
Other expenditure assumptions in both scenarios include:
Medical insurance costs inflated at a Memorandum of Understanding (MOU) cap
of 12% per year
Retirement costs reflect CaIPERS actuarial estimates for FY2008-09 and
FY2009-10. FY2010-11 through FY2012-13 are projected slightly above prior
years and estimated to remain flat based on conversations with Santa Monica's
CaIPERS representative.
In general, supplies and expenses are projected to increase at CPI for FY2009-
10and beyond. A $200,000 set-aside for fuel increases is included.
• Capital Improvement expenditures are primarily flat for ongoing expenditures with
variations for known internal service fund contributions such as vehicle and
computer replacements. Contributions for one-time projects are held flat at $3.0
million per yeas
Balance Sheet Transfers assume General Fund loans to subsidize other funds
such as the Civic Auditorium, Cemetery, Beach and the Housing Authority which
is losing federal funding for administration expenses. Transfers to the Pier fund
to support operations are included in the Non-Departmental supply and expense
line item in the budget.
Additional FY2007-08 anticipated Mid-Year increases have been added for
ongoing costs at $0.3 million per year.
• Enhancements included in the five-year forecast reflect the operating costs of
415 PCH reflected in the Beach Fund subsidy.
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The resulting expenditure projections show Baseline Scenario (4% labor increases)
budgets increasing from $249.8 million in FY2008-09 to $300.8 million in FY20012-13.
Labor
Supplies and Expenses
Capital
Subtotal Expenditure
Growth
Balance Sheet Transfers
Total Uses
Growth
Baseline Expenditure Growth
FY08/09 FY09/10 FY10/11 FY71/12 FY72/13
$ 170.2 179.7 189.8 200.8 212.3
61.2 64.0 (i5.ti 67.7 70.2
16.7 13.8 14.0 14.0 14.0
248.1 257.5 269.4 282.5 296.5
3.8% 4.8% 4.9% 5.0%
1.7 2.4 3.4 3.9 4.3
$ 249.8 259.9 272.8 286.4 300.8
4.0% 5.0% 5.0% 5.0%
The "Best Case Scenario, with labor cost-of-living increases limited to the anticipated
CPI of 3% in all but the first year of the forecast, slows the expenditure increases by
$6.9 million in the final year.
A-11
"Best" Case Expenditure Growth
Labor
Supplies and Expenses
Capital
Subtotal Expenditure
Growth
Balance Sheet Transfers
Total Uses
Growth
FY08/09 FY09/10 FY70/11 FY71/12 FY12/13
$ 170.2 178.2 186:7 195.9 205.4
61.2 64.0 65.6 67.7 70.2
16.7 13.8 14.0 14.0 14.0
248.1 256.0 266.3 277.6 289.6
3.2% 4.0% 4.2% 4.3%
1.7 2.4 3.4 3.9 4.3
$ 249.8 258.4 269.7 281.5 293.9
3.4% 4.4% 4.4% 4.4%
General Fund Expenditures
"Best" Case Scenario
Millions
$350
$300 _ ==_
$250 -- ~ ^ Balance Sheet Transfers
$200 o Capital
$150 ®Supplies & Expenses
$100 s Labor
$50
$0
FY08/09 FY09/10 F1'10/11 FY11/12 FY12/13
Fiscal Year
A worst case scenario for expenditures is not proposed since expenditures are
discretionary and there will always be additional expenditures that are not assumed in
the baseline scenario.
BUDGET GAPS
With the revenue projections plus available balance sheet resources and the
expenditure projections, the City financial forecast shows a structural deficit in both the
baseline and worst case scenarios. A structural deficit is defined as a budget where
ongoing revenues are not sufficient to cover ongoing expenditures at current service
levels.
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The baseline scenario shows a General Fund deficit beginning in FY2009-10 of $3.7
million and growing to $16.4 million in the fifth year of the Forecast.
• Slower revenue
growth
• Santa Monica
Place renovation
• Two new hotels
• Maintenance of
UUT on
telecomm
• 4% CPl on labor
costs
• CPI on Supplies
& Expenses
The worst case scenario shows a General Fund structural deficit of $8.0 million
beginning next fiscal year (FY2008-09) due to the reduced revenue projections
identified above. This deficit grows to $32.6 million in the fifth year.
• Recession
impact on most
revenues
• Loss of UUT on
telecomm
• 4% CPI on labor
costs
• CPI on Supplies
and Expenses
A-13
The "Best" Case Scenario, which projects a rosier revenue outlook and lower labor
projections, is essentially balanced throughout the full five year period. This is by far the
least likely of all scenarios since it assumes that the economic downturn will not impact
Santa Monica to any significant degree and that all labor costs increases will be held to
3% for years two through five.
• No recession
impact
• Maintaining UUT
on telecomm
• Higher Santa
Monica Place
revenues
• 3% CPI on labor
costs
• CPl on Supplies
and Expenses
A-14
Other Funds
Other major funds that are reviewed during the Five Year Forecast fall into three
categories:
Enterprise funds that are operated to generate sufficient revenues to sustain
necessary operation and capital needs
o Airport (33) /Special Aviation (52)
o Big Blue Bus (41)
o Solid Waste (27)
o Wastewater (31)
o Water (25)
Enterprise funds that require General Fund subsidies in order to meet their
operating and capital needs
o Housing Authority (12)
o Cemetery (37)
o Civic Auditorium (32)
o Pier (30)
Special Revenue Funds where fund are restricted by law for specific
purposes
o Beach (11) -Per the CAFR these are legally restricted to expenditures
for specified purposes; also the agreement with the State asserts that
beach revenue may only be used to support beach activities.
o Housing Authority (12)
For these funds, only one expenditure scenario is developed which is the baseline
forecast where labor costs are increased from the FY2008-09 Budget Plan year at 4%
per year beginning in FY2009-10. In general, fee and utility rate revenues are assumed
to increase at CPI. Where funds show a structural deficit, higher fee and rate increases
are proposed as alternatives. In summary, the funds status is:
NON-SUBSIDIZED ENTERPRISE FUNDS
Airport -During the five year forecast period, the fund maintains a positive fund
balance; however, only minimal capital expenditures are assumed and no re-
payments to the General Fund are assumed on loans totaling $9.5 million until
2015 when rental rates on lease contracts are due for renewal and can be
adjusted to market rate. Recent loans to the Airport fund include $2.4 million for
capital expenditures in FY2004-05 and $250,000 this year for litigation costs
related to airport operating issues with the Federal Aviation Administration.
Big Blue Bus -The forecasting of the status of the Big Blue Bus Fund is
different from other funds in that funds available to the Big Blue Bus (BBB) are
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not always held by the City but are available from the Los Angeles Metropolitan
County Transportation Authority (MTA) in the form of grant subsidy funds per the
formula share allocated by the MTA to BBB. Annual allocations of funds not
spent in the year of allocation are available up to two years later for use by the
transit system. The majority of the subsidy funds, including State transit
Assistance Fund (STA), Transportation Development Act funds (TDA),
Proposition A and Proposition C are sales tax based and grow by the sales tax
growth rate of the County of Los Angeles. For the purposes of this forecast
these funds are used sales tax growth assumptions from UCLA Anderson School
of Management adjusted for MTA projections and department staff assessment.
The baseline forecast includes additional STA revenues from Proposition 42
beginning in FY2008-09 of $1.2 million. However, given the State's budget crisis,
it is not clear whether the State will borrow transportation funds again to close the
budget gap. At this moment Big Blue Bus staff is cautiously optimistic and
believes that the STA funds will be left in tact.
A structural operating deficit still exists for the BBB and unless a fare increase is
adopted, the Big Blue Bus will be required to use available prior year subsidy
funds in FY2008-09 ($1.0) and FY2009-10 ($2.6). In future years the forecast
shows insufficient revenues to cover expenditures. BBB anticipates proposing to
Council a fare increase for FY2008-09. A study is currently being conducted to
assess operational efficiencies and financial capacity of the organization.
Solid Waste Fund -The baseline forecast for the Solid Waste Fund assumes
rate increases by CPI and services provided by City staff remaining at the
FY2007-08 levels. At this rate, the. Fund's expenditures will exceed its revenues,
depleting its Rate Stabilization Reserve ($0.5 m) in FY2008-09. The structural
deficit continues each year with dwindling reserves in FY2009-10 ($1.8 m.) and
FY2010-11 ($0.6 m) until FY2011-12 when all reserves are depleted and the
fund is in a deficit of $0.8 m growing to $2.7 m in FY2012-13.
In November, Council authorized the City to take control of all commercial
collections, beginning January 2009. Staff has also been reviewing options for a
public-private partnership regarding transfer station operations. These changes
are not included currently n the baseline forecast, but will impact the forecasted
fund balance and future rate changes. An updated fund balance forecast will be
presented to Council in the next few months as a new public-private partnership
for the transfer station is implemented.
Water Fund - Under a baseline scenario where rates increase at CPI, the fund
in FY2009-10 will use almost $900,000 of the $1.0 million Rate Stabilization
Reserve to fund operations. By FY2010-11, all reserves are depleted (operating,
rate stabilization and capital) with a total fund deficit of $0.8 million growing to
$9.6 million with no reserve funds. Based on this analysis, rate increases above
CPI are required.
A-16
The baseline forecast does not consider any impacts of a new Water Master
Plan, which is expected to be developed over the next several months. The
Water Fund is undergoing a rate study to evaluate the fund's ability to sustain
services. It is anticipated that rate recommendations, along with more detailed
financial information, will be presented to City Council in February with
implementation of changes prior to the end of the fiscal year.
Wastewater Fund -The baseline scenario reflects a fund deficit in the current
fiscal year of 6.0 million growing to $46.4 million in FY2012-13. However, the
fund has fronted $6.5 million in earthquake related construction funds that are
anticipated to be reimbursed by FEMA by FY2009-10. If these funds were
loaned by another fund, the Wastewater Fund will end the fiscal year on a more
positive note. Staff is studying other factors that could improve the fund position,
but these are not included in the baseline scenario. These options, along with
proposed rate increases will be presented to City Council in February for
consideration.
SUBSIDIZED ENTERPRISE FUNDS
Cemetery Fund -Under the baseline scenario, subsidies from the General Fund
to the Cemetery Fund are necessary throughout the five year forecast period.
FY2008-09 requires $0.3 million growing to $0.6 million in FY2012-13.
Over the past two years, staff has pursued several measures to improve the
maintenance and operations of the Cemetery and a Business Plan is currently in
the final stages of completion. It is anticipated that the Plan will call for
expansion capacity on the Cemetery property requiring additional capital
investments which will over time return higher revenues to the Fund. Financing
options will be included in the Business Plan.
Civic Auditorium -The Civic Auditorium requires an ongoing annual General
Fund subsidy of $0.7 million in FY2008-09 and from $1.5 to 1.6 million in
FY2009-10 through FY2012-13. This baseline forecast does not include major
infrastructure improvements, which would increase the subsidy.
Pier Fund -The Pier Fund generates approximately $3.2 million in revenue and
has operating expenses of $4.2 million for FY2007-08. The structural deficit
requires a General Fund subsidy for the Fund to remain in balance. The
subsidies required annually are $1.1 million in FY2008-09 growing to $1.6 million
in FY2012-13. As with the Civic Auditorium Fund, the Pier Fund baseline
forecast does not include major infrastructure improvements. CIP needs have
been identified as $5.3 million in FY2008-09 for infrastructure improvements with
$3.0 million annually thereafter for ongoing maintenance and capital programs.
Housing Authority Fund -This year, the Five Year Financial Forecast indicates
the Housing Authority for the first time will require subsidy funds in order to
maintain the same level of service currently provided. Declining Federal
A-17
subsidies have reduced the funding below the level needed to administer the
City's housing programs. The subsidies required annually are $0.2 million in
FY2008-09 growing to $0.5 million in FY20012-13.
SPECIAL REVENUE FUNDS
Beach Fund - A baseline scenario for the Beach Fund where the Annenberg
Community Beach House operating expenditure are incorporated into the budget
in FY2009-10 shows a need for Beach Fund subsidies of $0.2 m in FY2010-11
growing to $2.0 million in FY2012-13. This scenario does not include any County
Lifeguard costs above CPI. The City and the County have been on a month-to-
month agreement since December 31, 2006. Also not included are additional
one-time costs for the refurbishment of the Lifeguard Headquarters building. An
estimated $1.6 million will be requested by Community & Cultural- Services
Department as part of the FY2008-09 Capital Improvement Program budget
requests.
Each of these funds will be updated and further addressed during the development,
presentations and discussions on the FY2008-09 budget.
A-18
ATTACHMENT B
Update on FY2007/O8 Community Priorities Work Plan
FY2007-08 budget adoption established the Community Priorities Work Plan to be
addressed by departments over the current and next few fiscal years. Highlights of
accomplishments to date on these work plans include:
Special Focus Areas
Homelessness
• Outdoor meal providers were moved in September from temporary quarters at
612 Colorado to the new OPCC Access Center
• A community input and coordination process has begun for the community
education campaign on homelessness
The City, through Mayor Richard Bloom, participated in the National Mayor's
Summit to End Homelessness in November and signed the America's Road
Home Statement of Principles and Actions..
• A consultant has been selected to provide the City with a homeless management
software system
In support of affordable housing, infrastructure replacement, repairs and building
code compliance continues to be made at the Mountain View Mobile Home Park.
Pacific Court affordable housing project funded by Housing Trust Funds was
dedicated in October and will provide 44 new affordable homes for large families
Lane Use and Circulation Element Update
• Eight community-wide Land Use and Circulation Element Update workshops
have been held on the following key topics: Neighborhood Focused
Placemaking Workshops (4), IndustYial Lands Workshops (2) and Transportation
and Mobility Workshops (2).
Two transportation workshops were held to identify city-wide approaches to
increasing ridership on alternative modes of transportation.
Youth
• Expanded youth employment programs by creating 10 new student work and
apprentice position for high school girls under the Rosie's Girls program
Expanded Teen Center evening hours at Virginia Avenue Park
Expanded programs supporting parents of youth participating in programs at
Virginia Avenue Park
• Completed the first installment of semi-annual status report on gang violence
reduction.
Homework assistance is currently being provided through the Library through the
LiveHomeworkHelp.com service and Youth Services Librarian assigned to serve
as liaison to each school
B-1
• Basic computer skill and keyboard tutorial training is being provided at PAL by
Library staff.
Community Priorities
Culture
• Extended integrated arts/social service model at Virginia Avenue Park Teen
Center to younger park users.
• The Norton Family Foundation pledged support to Glow, Santa Monica's new
arts festival
Sustainability
• Presented conservation strategies to preserve the private tree canopy to the
Planning Commission in September
• Approval was received from the Coastal Commission for the Beech Greening
Project, with contract awarded in October and planned completion by the end of
the fiscal year.
• Environmental Programs staff has expanded efforts to educate the community
about the importance of water efficiency, especially during drought conditions,
and help reach the Sustainable City Plan goal of reducing water use 20% by
2010
• Santa Monica joined the Consortium of Sustainable Cities with the goal of
continuing the development and promotion of innovative sustainable city
practices.
• The 2007 Sustainable City Report Card was released on September 20, 2007
The non-recyclable food service container ban will take effect on February 8,
2008 and more than 680 businesses received information to assist them in
making the transition to approved packaging.
Implemented improvements for bicyclists by installing new bike racks and bike
detectors
• MiniBlue bus service implemented
• Installation of 50 Solar Santa Monica project sites to be completed by spring
2008 and report on Phase I I of the project set to go to Council.
• Beginning in November, the Santa Monica Farmer's Market began offering to
City employees a Market Basket program allowing employees to enjoy produce
from the Wednesday market even if they can't get to the Market location.
Education
The City received Safe Routes to Schools grant in the amount of $197,000 for
outreach and education for bicycle and pedestrian programs to be presented at
middle and elementary schools.
• Developed a phased plan for a coordinated and effective service system,
including multi-agency participation on a Youth Resource Team, for school-
based mental health programs
• Released funding for Barnum Hall audio equipment
B-2
Customer Service
• Established an internal project review and approval team for all phases of
building, permitting and inspection functions.
• Established policies and procedures for proactive zoning code enforcement for
compliance and quality of life concerns to maintain and upgrade an aging
housing stock and the surrounding neighborhoods.
• Formalized a review of community program relevance and quality of programs
funded by the Human Services Division.
• Selected a graphic designer and programming vendor to enhance the style,
graphics and navigation for the City's website.
• The City implemented new software which allows the Geographic Information
System (GIS) to display data in three dimensional format (3-D).
• Business License renewal process was improved to provide renewal notices two
weeks earlier than in previous years along with greater outreach efforts to remind
business owners of the deadline for filing.
• The City's internal service departments (Finance, Information Systems, Human
Resources and Community Maintenance) completed a survey of employee
satisfaction with services provided.
• The Traffic Division conducts enforcement saturation operations throughout the
City addressing specific areas of concern expressed by Santa Monica residents,
as well as those observed by traffic personnel and Gridlock Abatement Program
operations to facilitate traffic flow.
• Installation of free wireless Internet (Wi-Fi) was completed this year at the County
Courthouse, Memorial Park, and Chess Park.
• A workshop for small businesses on "Doing Business in Santa Monica Made
Easy' was held in October in collaboration with the Small Business Development
Center of Santa Monica College.
• In November, purchase of the SantaMoniCard (parking meter debit card) was
made available at the Main Library, Revenue/Treasury Office as well as the
Parking Office.
• Evaluated the current developmerit review processes to identify improvements.
• Held meeting with residents and businesses on new preferential parking zones
and met with the Wilmont neighbors on parking recommendation and potential
angled parking opportunities.
• Began construction of Phase 2 of the City-wide Traffic Signal Upgrade project
• The Big Blue Bus opened its new Transit Store and Customer Service Center at
223 Broadway in November providing a more convenient location to the public to
find transit related information and purchase fare media.
Capital Needs & Infrastructure
• Construction began in September on the new Maintenance Facility for the Big
Blue Bus. This long planned project is scheduled take two and a half years to
complete and provide a better facility in which to maintain the BBB bus and
service vehicle fleet.
• Senior Recreation Center upgrades began in December
B-3
• Sidewalk repair contract has been awarded and work is scheduled to begin in
Ocean Park neighborhood in early 2008.
A Request for Proposals was issued for design build services for the Charnock
water treatment plant. Contract for MTBE public information and outreach has
been awarded.
Recreation & Active Living
• Integrated youth fitness into Virginia Avenue Park programs by adding
information recreation and sports on weekends and after school for 30 youth.
• Euclid Park opened on July 15, 2008 and 10 new community gardening plots
were added to the park along with the implementation of gardening workshops.
• Bike Valet service was offered this summer for the Twilight Dance Series with
over 500 bikes handled each Thursday evening..
• Staff from Transportation Management, Human Services and the Big Blue Bus
provided information to Santa Monica High School students and their parents on
alternative and active modes of travel.
• In November a public meeting was held on programming input for the Annenberg
Community Beach House currently under construction.
• A public workshop was held on commercial surf activity (surfing schools) at the
beach
B-4
Additional
attachments
available for review
at City Clerk's
Office.